Judge Rejects Google Books Settlement

The lawsuit many have called potentially the most important development in digital copyright law since the DMCA entered a new phase yesterday, when Judge Denny Chin rejected the Google Book Search settlement. I say “potentially” because it was never certain that the ambitious vision of the settlement – a comprehensive digital library and bookstore including millions of out-of-print titles – would come to pass. Judge Chin’s opinion tracks through the difficult legal questions raised by the settlement, citing his significant concerns along the way, but the principal legal holding is that the settlement is not fair, adequate, and reasonable because the forward-looking aspects of the agreement exceed what the court may allow in a class-action settlement. (For background, see CDT’s earlier posts on the settlement. James Grimmelmann, law professor and leading settlement-watcher, has a detailed initial analysis of the opinion on his blog.)

CDT supported the settlement (while suggesting modifications to improve readers’ privacy protections) because we support the goal of opening up new ways to access millions of books that otherwise risk falling into obscurity. The online preview, library-access, and purchase models contemplated by the settlement would be a great win for readers and researchers, and for authors interested in reaching new audiences and boosting use of their works. In exchange for the expanded use of scanned books, Google was prepared to provide ongoing compensation to rightsholders, in addition to a one-time payment for books already scanned. These valuable new services and the accompanying compensation to rightsholders would not have been possible on the same scale even if Google had won a fair-use victory in the lawsuit. Under the settlement, Google could have provided access to a nearly comprehensive repository of digital books, including orphaned and unclaimed works.

But it is precisely the forward-looking nature of Google’s proposed uses of the scans that raised complex and difficult legal questions and made the settlement remarkable in its ambition. For example, the opinion cites (without deciding on) antitrust concerns raised by other would-be digital libraries and bookstores – and by the Department of Justice – that the settlement would grant Google a license to use unclaimed works that would be effectively unavailable to competitors. Judge Chin also expresses concern over the representation of absent class members with divergent interests, and whether a court-approved settlement can “place the onus on copyright owners to come forward to protect their rights” on an opt-out rather than opt-in basis and still be consistent with copyright’s grant of exclusive rights:

…in other class actions class members are merely releasing “claims” for damages for purported past aggrievements. In contrast, here class members would be giving up certain property rights in their creative works, and they would be deemed — by their silence — to have granted to Google a license to future use of their copyrighted works.

While the opinion is careful not to legally decide the many questions raised, all the questions taken together pushed the court to reject the settlement.

What next?

With this settlement rejected, the parties face a number of options. They could appeal the rejection, which would continue what has already been a long and at times contentious fight with objectors.

Alternatively, they could negotiate a new settlement. In a brief conclusion, Judge Chin suggests that a revised settlement that allows rightsholders to opt in to uses of their books might get more favorable treatment. Plaintiffs in the suit have expressed their willingness to make these revisions, but so far Google has been quiet. And it’s not clear to me Google would agree to an opt-in settlement. One of the most valuable features of the proposed settlement was that the database of books would be largely comprehensive, excluding only those books whose authors had opted out. An opt-in system would be far slower to build, and would exclude orphan and unclaimed works entirely.

Or the parties could proceed to litigation on the question of whether Google’s initial scanning, indexing, and display of short snippets constituted copyright infringement or fair use. This would forego the new uses and expanded access envisioned by the settlement. But it could result in a valuable (and in my opinion appropriate) fair-use decision that could open the door to new scanning and indexing initiatives.

As for how to achieve the comprehensive digital library, the opinion repeatedly makes the argument that the copyright issues involved are properly the domain of Congress, not a court considering a class-action settlement. Given the breadth and novelty of what the settlement sought to accomplish, this may be true, but the question then is what exactly should Congress do?

One possibility is a renewed push for orphan works legislation, which could facilitate new uses of copyrighted works in those cases where a search for the copyright holder turns up empty. Congress was close to enacting such legislation in 2006 and 2008. But this would be only a partial solution, and would not be much help to Google’s effort. As we’ve written before, mass-digitization and individual uses of orphan works present different problems. Building a digital repository of millions of books would be impractical, if not impossible, if including each and every book still required a particularized search for its rightsholder before it can be included. To build such a library, and achieve all the benefits of increased access to information, requires some kind of novel approach to licensing out-of-print works – possibly along the lines of what the settlement envisioned. Given the opposition the settlement met, this would be a difficult effort in Congress, but in CDT’s view one well worth undertaking.